U.S. Construction Ends 2024 on an Uptick
Photo Courtesy of AACE
NEW YORK, NY -- The Royal Institution of Chartered Surveyors (RICS) and American Association of Cost Engineering (AACE) USA Construction Monitor found the U.S. construction sector in a stronger position at the tail end of 2024, although skills shortages continue to delay projects.
The Construction Sentiment Index (CSI), which is a combination of key indicators, moved sharply higher climbing back to a reading of +40; this compares with +19 in the third quarter and +25 in the preceding three-month period, indicating notably strengthened confidence in the sector.
Out of all the sectors, infrastructure is leading the way with workloads. Infrastructure recorded an exceptionally strong +63% net balance figure, up from +34% in Q3. Digging deeper within infrastructure, energy is pulling the sector forward the most, with it posting a +69% figure for workloads. The U.S. Government invested in energy throughout 2024 with a wide array of construction projects involving renewables, batteries and nuclear facilities.
Housing and office workloads are also witnessing growth. Private residential and private non-residential workloads are demonstrating consistent uplift in activity. For private residential developments, the net balance for workloads was +26% versus +10% in Q3, while for non-residential workloads, including offices, it was +31% compared to +8%.
Business enquiries are also generally picking up, leading to improved workload expectations for the future. This has also raised confidence profit margins, which entered a positive net balance figure of +4%, up from -13% witnessed in Q3 and Q2 2024.
While all areas of the construction sector are showing a more positive trend, respondents note that skills and labor shortages continue to hamper developments. A respondent in New York voiced concerns about an aging workforce and the need to attract fresh talent into the industry, with an estimated 40% of built environment workers and professionals due for retirement in the next few years.
The overall position for the U.S. construction sector is strong at the end of 2024, and both short-term and longer-term outlooks are positive. A key challenge going forward is to fill the widening skills gaps, which if done, can only propel the sector forward faster and further.
"The U.S. construction economy continued to gain traction in the 4th quarter of 2024, with infrastructure projects fueling growth and project backlogs reaching their highest levels since 2022,” said Michael Kobylka II, CEO of AACE. “While U.S. contractors are seeing strong demand, the ongoing skilled labor shortage remains a critical challenge that could impact future capacity. The data shows that the new administration's policy agenda must address skilled workforce shortages in the U.S. and control the cost of construction materials to sustain this momentum and meet the industry's long-term needs."
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